Tesla reported a fourth-quarter 2017 adjusted EPS loss of $3.04, beating consensus of a loss of $3.12. We are leaving our fair value estimate in place but as always, we will reassess our modeling assumptions when we update our model for the 10-K filing. We think the long-term story on what Tesla can achieve in electric cars, trucks, mobility, and energy generation and storage will ultimately determine the value of the company. We believe the stock trades on momentum for option value that, if realized, is still many years away, and therefore we do not think any single quarter’s results are critical to the investment thesis.

We were pleasantly surprised to see dramatic improvement in Tesla’s adjusted free cash flow number, which adds back cash received from collateralized leasing. The adjusted metric improved to a burn of $181.9 million, an improvement from fourth-quarter 2016’s $757.8 million burn and third-quarter 2017’s burn of over $1.3 billion. For the full-year 2017, we calculate a free cash outflow of just under $3 billion compared with a $635 million burn in 2016.

Fourth-quarter 2017 cash flow benefited from good working capital via both inventory and receivable collection, deferring some capital expenditure on the Model 3 sedan to first quarter--actual capital expenditure was $786.7 million compared with guidance of about $1 billion in the third quarter letter--and residential solar panel cash and loan sales (as opposed to leasing) penetration rose to 54% of residential solar compared with 25% in the prior year’s quarter. Vehicle deliveries grew 35% year over year by our calculation to 29,967 and rose 15% from third-quarter 2017. Model 3 deliveries were 1,542, up from 222 in third quarter. Management expects Model 3 production of 5,000 a week by the end of June and targets 10,000 a week after that. Net Model 3 reservations were “stable” in fourth quarter and have grown in 2018 with more foot traffic coming to see the vehicle in select stores.

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